The rise and fall of the Sony empire

With the recent report that Sony sold all of its S-LCD interests to Samsung in return for $939 million another flare has been shot, warning that the former king of electronics remains on a downward spiral that has no end in sight. A lack of innovation and misguided decisions (not to mention a few natural disasters) have eroded at the foundation of the company while competitors like Samsung and LG have overtaken the electronics giant in markets such as televisions and mobile phones. It wasn’t that long ago that Sony products were considered the creme de la creme of consumer electronics, the pinnacle for technophiles the world over. What factors have caused this the company’s slide into mediocrity? To answer that question, we need to take a look at Sony during its most successful period, the explosion of the ’80s and early ’90s.

It’s difficult to explain to people born after 1990 what kind of cultural impact Sony had during this time. Simply put, Sony was the Apple of its day, a company that released products that were the result of innovation being merged with everyday media consumption habits. When Sony unveiled the now-legendary Walkman in 1979, it fomented a revolution in the way people interacted with music. Buyers flocked in droves to retailers to get their hands on the device that would allow them to bring their music, in the form of analog cassette tapes, wherever they wanted. It was the must-have device of the decade, cementing the Sony brand in the mind of consumers as the name in electronics. Even when rival companies began churning out lower cost knockoffs, consumer demand for the Walkman remained high because consumers trusted the name. No matter the price, people would buy a device if it had the Sony name printed on it. Sony, not Apple, invented the extreme consumer dedication Cupertino now enjoys.

Following up on the Walkman craze of the ’80s, Sony once again changed the entire face of audio recording when it teamed up with Phillips to perfect the compact disc media format. CDs opened up a vast array of possibilities with the ability to give users a “master” copy of audio files as well as the convenience of being able to quickly select different tracks. The quality and amount of music that can be stored on a compact disc vastly outstripped the cassette tape, and once again thrust Sony into the forefront of media consumption innovation.

Unfortunately, the CD can be seen as the peak of Sony’s influence on the market. While it continued to develop new formats, such as the MiniDisc, none enjoyed the mass adoption that its previous efforts had enjoyed. (Sure, MiniDV and Blu-ray have done well, but only because of a lack of affordable alternative storage mediums. Flash media and streaming online content delivery are making these obsolete.) Sony became a nebulous company that fell prey to both its own avarice and the ability of its competitors to correctly gauge where consumers were going to look next for the next generation of media technology. Namely, the MP3.

If I had to point to a specific day in history that marked the decline of Sony as the worldwide leader in technology, it would be October 23, 2001. This was the date that Steve Jobs took the stage in his mock-turtlenecked glory and announced the next revolution in music, the iPod. In one fell swoop, Apple beat Sony to one of the most important technological advances this century. By giving consumers a device with instant purchasing power and the ability to listen to high quality audio files on the go, Cupertino completely changed the playing field for music consumption, a feat that Sony was no longer capable of.

Look at their stocks, for crying out loud. They only have a Market Cap at $18.10 Billion, only have the Enterprise Value at $23.64 Billion, they now have $13 Billion in debt, & only have at least $7.45 Billion cash in hand. They are clearly suffering all around, & things may get worse from there.

Anonymous

No way the PS3 has better media capability then the Xbox360. The only one up the PS3 has is built in Blu-ray and as you said that isnt going to do well for long with all the streaming services available. Xbox Live destroys PSN not to mention the 360s built in media center. Id like you to name just one thing outside of blu-ray that the PS3 even competes with the 360 media wise. The issue with Sony is that they built trust in a name and then stopped building quality once they were established as the market leader. The same will happen to Apple. The iPod is not and never was the best MP3 player on the market. Companies seem to forget waht got them to the top once they are there. Quality gets you there then it goes out the window for higher profit margins.

Anonymous

This was what I was about to say. I bought another backwards-compatible PS3 from a friend who was moving back to Xbox to install at my g/f’s so she could stream Netflix and watch downloaded movies. Nothing worked. Discovered that the movies I’d burned to DVDs were unplayable because the PS3 cannot see anything not in a folder labeled VIDEO. Another downloaded movie lost its audio and popped up a message code indicating anti-piracy measures were causing this. Popped the key drive into my Xbox and it played properly and looked better. Ended up just putting it into storage.

Add on the ergonomically miserable controllers which are unchanged since the original DualShock design back in the 20th Century and you’ve got a bloated, inertia-hobbled company that still believes its substandard products are worthy of premium prices. Cadillac prices for Chevy quality.

Jeff Jones

“
Companies seem to forget waht got them to the top once they are there. Quality gets you there then it goes out the window for higher profit margins.”

That is the single biggest recurring reason I end up looking at other brands instead of maintaining brand loyalty. With Sony (in the late 80s) their receivers started losing features in the lower end models while JVC and other brands had more features at the same price point. In the 90s they opted toward using exclusive Sony Memory Sticks (not designed here syndrome) while others were adopting SD and Compact Flash.

http://pulse.yahoo.com/_J4KI6T6CLVYZ67M4766SD6DU4M Michael

What did it for me was the BMG DRM rootkit fiasco. I have not (and will not) buy another Sony product again.

mori bund

The rootkit scandal was a turning point for me too, because it showed blatantly that Sony has no respect for its own costumers.
Never bought a Sony product again since then.

Anonymous

I personally don’t believe in brand loyalty – a company is only as good as the last product it sold me. If i buy a shoddy product from a company, or receive a bad service, i’ll switch to another company. Simple as that.

My friends PS3 got the yellow light of death – he called them, they said its out of warranty so he will have to pay to have it repaired, and only get a 2 month warranty on that repair. Now in the UK, trading standards law says that a product has to be fit for the purpose it was bought for, and last a reasonable amount of time. It was only a couple of years old, a games console should last longer than that. He said this to Sony – they didn’t care.

For me, the quickest way to lose me as a customer is to not care. I literally hate companies that sell shoddy products, as far as i’m concerned its no better than theft. After seeing how they treated my friend, they have lost any future business from me too. If Sony is in decline, good riddance. They can make way for better companies and better products.

http://pulse.yahoo.com/_CDQXGLDTL2M7E72W3UDYFABANY bob k

I haven’t bought a Sony product since they rootkit’ed me, you don’t do crap like that to the people you want to buy your products.

Anonymous

I worked in Sony for 8 years (1994-2002). In the year 1996 I told the President of my company, Mr. Kunimasa Suzuki, that I thought people would have a social experience communicating through computers. He just laughed and told me “I cannot imagine my daughter making friends through the screen of a computer”. Then, inspired in BBS, I presented a project for a social network in the year 1999… no answer. Then I was fired in 2002 (because of the Argentinian crisis). That’s the way they treat visionaries at Sony. But Mr. Suzuki is actually vice president at SCE, get it?

mori bund

I have a Sony CD-player from 1990 – it still works perfectly. And I have a cd-changer from 1999 – it got faulty just after a few years.
Until the early 90s Sony was considered as the number 1 of the hifi segment. It was a expensive, but the quality of its products was worth it.
Than Sony decided to go the Michael Eisner/Disney-route: using their high quality brand to produce cheap crap and sell it to high prices.
(Actually they don’t produced it anymore – they outsourced a lot of their productions to cheap manufacturers.)
And this illustrates Sony’s first big mistake: no respect for the customer! The probably thought we are too stupid to realize this, but in the long run they destroyed their own brand.
Other signs of their disrespect for us are the Sony-BMG-rootkit-scandal, how they handled the hack of their website this year, the way how they forced the BluRay-drive down the throats of their PS3-costumers, their proprietary standards and connectors, the Xperia-Update-failure, etc.
This long list tells a lot about their second big mistake: their unable to learn, because they are unable to acknowledge their failure!
After each failure they usually publish a statement that tells us why it’s everybody’s fault but theirs.

An interesting comparison is the decline of Sony with the rise of LG:
While Sony started to outsource their productions to cheap manufacturers to save money but still sell overpriced products, LG – a few years ago considered as a low-end-producer – started to manufacture their own hardware parts to a high quality instead of out-sourcing it and sell their products to fair prices.

BTW: I stopped buying from Sony after the rootkit-scandal.

Lupius

Sony lost me by sticking with their Memory Stick when SD cards became industry standard.

Neoprimal

Sony suffers from the same thing Apple suffers from, delusions of grandeur. The huge difference is that Apple currently has a horde of fans behind them and are innovating (so to speak) product-wise.

Sony is of the delusion that their products demand a premium and so are charging premium prices for very standard products. Products that you will find better versions of for cheaper by other brands. This has been going on for so long that it’s finally starting to affect them.

Unlike Apple, there aren’t many Sony fans. No one’s going to blindly buy that 55″ TV for 1500 if Samsung or LG are selling their 55″ TV with similar or maybe even better features for 1000.

Good luck to them though, I remember when the name actually meant something. Now it just means “it’ll probably be expensive”.

Anonymous

Neither Sony nor Apple actually invented the key devices you mention. There
were other portable cassette players before the walkman and there were other
portable digital music players before the iPOD. What each in fact did was make
the first of these products that really caught the public’s eye

Anonymous

I was interesed in the MD format disk but the smallest device was a player which cost $450 which was a lot of money.
It stayed at that price for a very long time until the device was superceded and the MD format died.

Arturo Sanchez

Not even their phones are good anymore. At any rate i came here to read about the walkman while watching an interbiew of Tom Petty saying something about consumers not getting quality music. Thanks you MP3, you ruined music; i hope not forever. But it certainly changed the way people “consume” music. I just wish there was a really high quality, no bullshit, player out there. The DVD-audio died, i don’t we will ever get blu ray albums and why? Because everybody seems to like listening to crappy mp3 with crappy earbuds and just listening to the new “hits” that come out everyday by corporate puppets under the disguise of artists.

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